Stakeholders Relationships in Recycling Systems Experiences in

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Stakeholders’ Relationships in Recycling Systems:
Experiences in the Philippines and Japan                                          ∗



Michikazu Kojima and Ma. Lourdes G. Rebullida




                           Junk shop in Bagio, Philippines.
                           Photo by Michikazu Kojima in October 2006.




                                             Instruction on source separation posted near an elevator of an
                                             apartment house in Chiba, Japan.
                                             Photo by Michikazu Kojima in 2008.

                                             Categories are “combustible,” “incombustible,” “toxic waste,”
                                             “recyclable materials,” and “bulky items.” “Recyclable Mate-
                                             rials” consist of glasses (subcategories: clear bottles, brown
                                             bottles and other), cans, PET bottles, papers (subcategories:
                                             newspaper, magazine, carton, milk carton and miscellaneous
                                             paper) and clothing items.




∗
  Data on the Philippines is derived from the study “Recycling in the Philippines: Focus on Recycling and
  Trading Dimensions” (2005-7) by Michikazu Kojima, Ma. Lourdes G. Rebullida and Femilia Honorio, under-
  taken by IDE-JETRO, the Foundation for Integrative and Development Studies, and the UP Center for Inte-
  grative and Development Studies.
____________________________
Michikazu Kojima ed., Promoting 3Rs in Developing Countries: Lessons from the Japanese Expe-
rience, Chiba, IDE-JETRO, 2008.
                     Stakeholders’ Relationships in the Recycling Systems                      81



Introduction

This chapter examines the stakeholders and their relationships in the recycling system, spe-
cifically waste generators, waste collectors, trader-consolidators, recycler-processors, and
manufacturers. It presents the experiences of the Philippines and Japan, to help clarify the
terms and concepts employed when referring to various types of stakeholders in the recycling
system. It is assumed that if reliable relationships exist between stakeholders and the linkages
work well, the recycling system will operate effectively, resulting in quality materials being
recovered and reused through the system. This in turn leads to a steady stream of demand for
waste resources, referred to as recyclables as well as the production of quality recycled mate-
rials. When such relationships and linkages fail, however, certain preventive and remedial
measures are needed to sustain recycling as a strategic solution for protecting the environment
and conserving natural resources, even as economic development is pursued.
   The basic framework can be found in related literature, while study results serve to clarify
the terms, concepts, and processes involving the types of stakeholders that play a role in the
operation of the recycling system. In the study conducted and as used in this chapter, the “re-
cycling system” refers to the interactions between stakeholders in conducting transactions in-
volving recyclable waste resources, which undergo processes resulting in materials of use in
the manufacture of recycled products. The stakeholders in a recycling system primarily in-
clude those discussed hereon. The “waste generator” uses or consumes materials, thereby
generating waste, and either discards this waste for final disposal or sells it to the “waste col-
lector.” Waste collectors include those at the levels of collection and aggregation (“primary
level” and “secondary level” waste collectors, respectively), who in turn bring the materials to
the “trader-consolidator.” The trader-consolidator assembles volumes of waste from the waste
collectors and engage in recovering waste resources, specifically, “recyclables.” At these
stages, however, the waste generator may or may not have been reliable in providing appro-
priate quality waste resources to the waste collector, which in turn flow to the trad-
er-consolidator. Next, the “recycler” performs processes on the waste materials, and finally,
the “manufacturer” uses these materials to make “recycled products.” The requirement for
quality in production may result in rejection of, or a reduction in the buying price for, the
waste resources concerned. Fraud may occur, such as the inclusion of recyclables or waste
resources of unacceptable quality. On the other hand, reliability depends on stakeholders pro-
viding each other with quality materials at each transaction level. The sustainability of the re-
cycling system and its contribution to environmental management may be threatened if the
relationships thereof become unreliable.
   The economic development level of the countries involved also sets parameters for the re-
lationships between recycling stakeholders. In some developing countries, waste generators
are disinclined to segregate types of waste and instead pass this responsibility to the waste
collector. However, segregation at source is a vital precondition for a workable recycling sys-
tem as this ensures a level of waste material quality capable of meeting the demands of recy-
clers and manufacturers. Furthermore, the countries’ developmental levels determine factors
such as the level of consumer demand for high quality products, whether made of virgin or
recycled materials. The prospects for recycling and its contribution to environmental sus-
tainability could be undermined if recyclables used as production resources and the resulting re-
cycled products are of poor quality. Thus it is argued that demand for recyclables and recycled
82                   Stakeholders’ Relationships in the Recycling Systems



materials will decline if quality declines. Such a decline would undermine the policies of
countries such as the Philippines and Japan which practice recycling through the reuse of
waste resources. Recycling is viewed as a possible solution to the problem of natural resource
depletion through the use of virgin materials in production, and the problem of environmental
degradation due to indiscriminate disposal.
   This paper presents the Philippine and Japanese experiences on the linkages between
stakeholders in the recycling system, in the context of the laws and policies of the respective
countries. The gaps, failures, and learning experiences therein serve as starting points for cor-
responding measures to sustain recycling and actualize policy implementation.
   The Philippine data was obtained from the 2005-7 study initiated by the Institute of Devel-
oping Economies (IDE) based in Japan, in cooperation with the Foundation for Integrative
and Development Studies (FIDS) and the University of the Philippines Center for Integrative
and Development Studies (UPCIDS). The findings come from a total of 63 junkshops, seven
traders, and 11 recycling plants. An earlier study in 1999 by the Japan International Coopera-
tion Agency (JICA) examined solid waste management in the Philippines, prior to the legisla-
tion of Republic Act 2003, the Ecological Solid Waste Management Act of the Philippines.
Other studies in the Philippines focused on efforts by local governments, nongovernmental
organizations, businesses, industries and communities (Rebullida 2000, 2002; Philssa 1996;
Philippine Business for the Environment 2002; Lapid 2004). Almost concurrently with the
IDE study, JICA and the Philippine Board of Investment embarked on the “Study on Recy-
cling Industry Development” (2006-7). The 2006-7 IDE (Phase II) and JICA studies showed
mutually reenforcing results.
   Data on Japanese experiences in recycling were obtained by interviews, site visits, docu-
ments, and secondary references available in Japan.

4.1 The Philippine Experience

4.1.1 Policy Framework

   The Philippines enacted Republic Act 9003, the Ecological Solid Waste Management Act
of 2000, in response to environmental problems affecting mainly urban areas and the threats
to life and health posed by improper solid waste management. The law places recycling with-
in the “ecological solid waste management” framework, involving the “systematic adminis-
tration of activities which provide for segregation at source, segregated transportation, storage,
transfer, processing, treatment, and disposal of solid waste; and all other waste management
activities which do not harm the environment.”
   Republic Act 9003 requires products and materials to be environmentally acceptable, and
defines post-consumer products and environmentally unacceptable products. The process of
recycling should start with the design, quality, and packaging of the product at the time of
production, such that the materials thereof are amenable to recycling. Implementation of the
framework and the law entails the provision of opportunities for recycling, starting with the
availability of and access to recycling receptacles and material recovery facilities. The waste
undergoes sorting and segregation right from the point of waste generation as well as collec-
tion and storage in a material recovery facility to avoid being discarded to the final disposal
site. The materials are sent to the manufacturer’s buyback centers. In effect, the process re-
                     Stakeholders’ Relationships in the Recycling Systems                      83



sults in waste reduction, insofar as only the residuals (waste which can no longer be reused)
are transported to the final disposal site these days comprising sanitary landfills rather than
an open dumpsites.
   The act also mandates implementation by central government and local government agen-
cies, and encourages the participation of the private sector, nongovernmental organizations
and communities. The successful implementation of recycling in the Philippines would fur-
ther help facilitate the actualization of this law as well as helping to address the country’s
problems of environmental pollution and natural resource depletion due to production and
consumption. Examining precisely what is workable or unworkable in terms of recycling is
vital in determining appropriate measures for actualizing the law.

4.1.2 Stakeholders in the Philippine Recycling System

  Initially, research literature provided the deductive foundation for the framework used in
the IDE study from 2005 to 2006. Subsequently, the survey data itself provided the empirical
foundation for the types of stakeholders and their relationships in the trading of recyclables in
the recycling system. The IDE study results in the Philippines clarify the use of the term “re-
cycler” as generally pertaining to the different types of stakeholders in the recycling system,
though in a restrictive sense, it refers to the recycler-processor, who performs the necessary
processes on the recyclables, the results of which are the materials used, by themselves or in
combination with virgin materials, in the manufacture of so-called “recycled products.”

Trading process flow and recycler relationships
   The recycling system involves the trading (buying and selling) of waste materials, con-
sidered as waste resources. Stakeholders are those who participate in the recycling system.
The trading system and the specific types of stakeholders are described below:
1. Waste generators are the primary sources, as these are the first level collectors and sellers
    of recyclables. They are considered to comprise individuals, households, institutions (such
    as schools and government offices), commercial and business establishments, and manu-
    facturers in various industries. The waste generators consume or use materials, after which
    they either discard these for final disposal or sell them to various types of waste collectors
    and processors of recyclables, namely: roving pushcart collectors (also known as
    eco-aides or scavengers) , primary junkshops, consolidator-traders, recycling plants, or
    even directly to manufacturers that use recyclables and recycled materials.
2. The primary junkshop is a buyer of recyclables from the primary waste generators de-
    scribed above. The primary junkshop in turn sells to the next level of buyer. Primary
    junkshops generally have small-scale operations, and often sell their collection of recy-
    clables to larger scale junkshops—known as trader-consolidators Alternatively, they may
    sell directly to a recycler-processor, or even to a recycled product manufacturer.
3. The trader-consolidator is essentially a junkshop handling large volumes of recyclables. In
    some cases it may sell to a larger trader-consolidator. The trader-consolidator aggregates
    volumes of recyclables for sale to a recycler-processor, and sometimes even sells directly
    to a recycled product manufacturer.
4. The recycler-processor refers restrictively to units which process recyclables into a reus-
    able form. These processed recyclables then become reusable materials, to be used in the
84                   Stakeholders’ Relationships in the Recycling Systems



     manufacture of recycled products, either by themselves or in combination with virgin or
     other materials.
5. The manufacturer buys the processed recyclables and uses them, either as they are as
     reusable materials or in combination with virgin materials, to produce recycled products.
   The junkshops are differentiated by the characteristics of their business structures and trad-
ing operations, including such variables as space, capital, recycling processes, transportation,
equipment, volume of collection, market, and trading network. The trading relationships be-
tween the types of recyclers affect the level of the trade as well as the flow of recyclable ma-
terials within the country and to foreign countries. The research data also calls attention to
important dimensions in the recyclers’ trade operations and recycling processes, such as
transportation, equipment, pollution control measures; problems in collection, storage, and
sales, as well as health, labor and other social concerns. Some junkshops and trad-
er-consolidators prefer to deal only with one type of waste material, such as paper, metal,
glass, or plastic; others handle a range of types. There are also trader-consolidators that export
volumes of recyclables by type to overseas buyers.
   There are two types of junkshop that are indispensable to the aggregation of recyclables.
These are described below.
(1) Type 1 – Primary Junkshop. This category purchases and collects from primary sources
       or generators of recyclables, including households, markets, commercial and industrial
       establishments, and offices. Primary Junkshops hire so-called eco-aides that is, roving
       collectors of recyclables who buy from primary sources of waste generation. The
       primary junkshop handles small volumes, and has limited space and capital and few
       workers; and sells to larger junkshops, namely trader-consolidators, and in some cases
       directly to recycling plants.
(2) Type 2 – Trader-Consolidator. This category also buys from primary sources and
       primary junkshops, but is responsible for consolidating volumes of recyclables.
       Compared to primary junkshops, trader-consolidators operate with considerably more
       space, capital, and workers, and handle larger collection volumes. They sell to recycling
       plants, or to larger trader-consolidators, which also act as exporters of recyclables to
       buyers in other countries. However in practice, trader-consolidators are not easily
       distinguishable from other junkshops. Some can be identified only by self-disclosure,
       while others are identified by other organizations.
   The recycling plant is an important stakeholder because it converts processed recyclables
into new recycled products. Recycling plants usually engage in processing a single type of
recyclable – specifically paper, metal, plastic, or glass.
   Based on the study findings, Figure 1 below presents the stakeholders in the Philippine re-
cycling system. It shows a generic model for the transaction flow of any one type of recycla-
ble.

Characteristics of recycling stakeholders in the Philippines
   The characteristics of the recycling system’s stakeholders are described below based on the
study findings. The six variables of location, business organization, capital, length of opera-
tion, labor force, and space are considered vital to the operation and sustainability of the recy-
cling system.
                        Stakeholders’ Relationships in the Recycling Systems                              85



Location. Junkshops are usually found in residential areas, within barangays, while trad-
er-consolidators tend to be located either in commercial or residential areas, or in one case in
the sample, at a dumpsite. On the other hand, recycling plants are generally located in indus-
trial zones.

Business organization. Junkshops are generally sole proprietorships. On the other hand, recy-
cling plants are mostly corporations, and engage in processing recyclables into new recycled
materials sold to product manufacturers that use recycled materials.

Capital. The sample junkshops located in the Metro Manila and North Luzon areas can large-
ly be grouped in the following categories based on their capital: up to PHP20,000; PHP20,000
to PHP60,000; and PHP60,000 to PHP100,000. A few sample junkshops in the Metro Manila
area have higher capitals of PHP300,000 to PHP500,000, while one has a capital of PHP1
million. While junkshops with such capital levels may be considered trader-consolidators, the
respondents in question preferred not to classify their businesses in this category, but rather as
“scrap dealers.” Competition among junkshops makes rolling capital a crucial factor when
buying volumes of recyclables. Trader-consolidators in the North Luzon area can be identified
as such by the Business Licensing Unit of the local government. They can be classified by
their capital as follows: up to PHP20,000; and up to PHP200,000.

      Fig. 1 Recyclers Flow of Trade and Flow of Recyclable Recycling
             PRIMARY
            SOURCES OF
           RECYCLABLES
       •     Households
       •     Businesses and
             commercial
             establishments                                                         RECYCLING
       •     Institutions                                                             PLANT
       •     Industries               TYPE 1 Prima-
                                       ry junkshop                               (Processing of recyc-
                                                                                        lables)


           Roving collectors
           (eco-aides, push           TYPE 2a Junk-
            cart collectors,          shop-trader-con
             scavengers)                 solidator




                                          TYPE 2b,
                                            Trader
                                       –consolidator
                                       (large scale col-
                                      lection); exporter
                                                                               MANUFACTURER (User of
                                                                                processed materials to pro-
                                                                                 duce recycled materials)

                                          Exporter
86                   Stakeholders’ Relationships in the Recycling Systems



   Recycling plants prefer to keep their levels of capital confidential. One plant in the sample
disclosed a range of between PHP40 million and PHP50 million. The type of processing, the
necessary equipment, and the volume of material required are all factors contributing to recy-
cling plants’ needs for huge sums of capital.

Length of operation. Nearly half of the junkshops in the sample, including trad-
er-consolidators, had only been in operation for five years or less; others had been operating
for up to 10 years. Such low figures may be considered a result of legislation and policies on
recycling. These new junkshops compete with each other as well as with those that have been
in business for longer periods. At least one sample recycling plant had been operating for be-
tween 20 and 30 years; one between 30 and 40 years; and one between 50 and 60 years. Three
of the 11 sample recycling plants had been in operation for up to 10 years and two for up to 20
years. This suggests that the majority of recycling plants may have been operating for shorter
periods.

Labor force. The majority of the sample junkshops have one to five workers; a few have up to
10 to 15 workers; while one in Metro Manila has 26 to 30 workers. Six of the 11 sample recy-
cling plants have up to 100 workers. The number of workers can indicate the extent of the or-
ganization’s business operations and, in the case of junkshops, the type.

Space. The various recyclers either own or rent the space they use for the trading and
processing operations. Space is rented by more than half of the junkshops, while the remaind-
er owns their own land. Rental costs vary and can be as much as PHP35,000 monthly. The
majority (76%) of junkshops occupy an area of up to 300 m2; a few have between 300 and
700 m2. The sample traders in North Luzon have from 500 to 2000 m2. At least one sample
recycling plant disclosed their land area at less than 1000 m2; another at up to 5000 m2; while
another one possessed a land area of between 15,000 and 20,000 m2. In cases of rental, costs
ranged from PHP1,000 to PHP50,000 at the low end, up to PHP1million to PHP5 million
monthly.

4.1.3 Linkage Breakdowns between Stakeholders in the Philippine Recycling System

The recyclables market: Supply and demand for types of recyclables
   Paper types in the recycling system include white paper, newspapers, carton boxes, and as-
sorted paper. However, small junkshops, trader-consolidator junkshops, and recycling plants
alike all face difficulties due to improper sorting of paper, or the improper content of heavy
impurities in attempts to increase weight and value. Furthermore, recycling plants find paper
materials difficult to dissolve when plastic materials are admixed.
   In the case of glass, white glass, whole or broken, is preferred, but recycling plants regu-
larly find impurities in such recyclables, eventually leading to rejection for processing or the
production of defective products. PET plastics are also preferred but recycling plants will re-
ject supplied volumes if found to be poor in quality.
   In contrast, there is not much demand for waste tin cans or colored glass bottles due to the
lack of willing buyers. Some traders will not buy yellow copper, brass or bronze waste due to
the risk of theft and the problems thereof.
                      Stakeholders’ Relationships in the Recycling Systems                          87


Table 1 Recyclers’ Common Criteria for Buying and Selling Recyclables
Type                      Common Criteria for Buying          Common Processes Conducted before
                                   Recyclables                          Selling Recyclables
Paper                 Dry, sorted/segregated; availability   Sorting/segregating, drying, compacting
                      of buyers
Metals                Dismantled, sorted/segregated;         Sorting/segregating, cutting/dismantling,
                      availability of buyers                 compacting
Glass                 Sorted, crushed (dismantled);          Sorting, compacting, crushing (disman-
                      availability of buyers                 tling)
Plastic               Sorted, dry; availability of buyers    Sorting/segregating, cleaning/washing,
                                                             drying
E-waste               Dismantled/disassembled, sorted;       Cutting/dismantling, sorting, compacting
                      availability of buyers
Automotive            Dismantled/disassembled, sorted;       Sorting/segregating, dismantling, drying
  batteries           availability of buyers

  If domestically generated recyclable wastes are of insufficient quality, recycling plants in-
variably prefer to import. Hence, improving the quality of collected recyclable waste would
appear essential to the steady demand for waste resources.

Criteria for buying and selling recyclables
   When buyers reject recyclables, sellers incur loss of capital and profit. Table 1 shows the
criteria used by junkshops, trader-consolidators, and recycling plants respectively when buy-
ing recyclables, as well as the processes conducted on recyclables to ensure quality for trade
purposes.

Reasons for refusal of recyclables
   Problems are anticipated in the trade of white paper in conjunction with the expected im-
portation of recycled white paper. Recyclers generally find it troublesome when materials are
not sorted and segregated, forcing them to conduct such processes themselves after purchase.
Rejected materials also lead to losses of profit and reductions in volumes of quality recy-
clables for all recyclers. Trader-consolidators consider the following factors when deciding to
buy or reject recyclables: availability of buyers, length of storage time required, storage space,
and the prices offered by buyers, for each type of recyclable. Small junkshops and trad-
er-consolidators usually refuse dirty recyclables because they will be rejected by their end
buyers, the recycling plants. They also reject bulky materials due to lack of space. Recycling
plants are concerned with material quality and requirements for processing (Table 2).
 88                        Stakeholders’ Relationships in the Recycling Systems


 Table 2     Comparative Stakeholders’ Perceptions of Problems in Trading
     Type of Waste              Recycling Plants     Trader-Consolidators               Junkshops
White paper                    Not segregated       Competes with in-        Not enough supply to meet
                               upon delivery        coming cheap paper       demand of traders; no direct
                                                    waste resources          traders
                               Hard to dissolve                              Too tedious to sort and se-
                               due to plastic im-                            gregate; dirty/messy to col-
                               purities                                      lect/store; limited storage
                                                                             space
Newspapers                                          Compete with incom-      Not enough supply to meet
                                                    ing imported cheap       demand of traders
                                                    paper waste resources
                               Not segregated                                Limited storage space
                               upon delivery
                               Hard to dissolve                              Fire hazard
                               due to plastic im-
                               purities
Paper boxes, corrugated                             Compete with incom-      Not enough supply to meet
  cartons                                           ing imported cheap       demand of traders; no direct
                                                    paper waste resources    traders
                               Not segregated                                Dirty/messy to collect/store;
                               upon delivery                                 limited storage space/too
                                                                             bulky
                               Quality: hard to                              Fire hazard
                               dissolve due to
                               plastic impurities
Assorted paper                                      Competes with in-        Not enough supply to meet
                                                    coming imported          demand of traders; no buy-
                                                    cheap recycled paper     ers/direct traders
                               Not segregated                                Too troublesome to
                               upon delivery                                 sort/segregate, dirty/messy
                                                                             to collect/store; limited sto-
                                                                             rage space
                               Hard to dissolve                              Fire hazard
                               due to plastic im-
                               purities
Aluminum (light and            Low price and
  heavy)                       supply; seasonal
                               prices; unsteady
                               supply
Tin                                                 No buyers; few sup-
                                                    pliers
Lead                                                No buyers; few sup-
                                                    pliers; poisonous
Yellow copper/bronze                                Low in price and
                                                    supply
White glass bottles/jars                                                     Limited storage space; fra-
                                                                             gile/dangerous to stock; dir-
                                                                             ty/messy to collect/store; no
                                                                             buyers; not profitable; not
                                                                             interested
                         Stakeholders’ Relationships in the Recycling Systems                         89



     Type of Waste             Recycling Plants     Trader-Consolidators            Junkshops
Colored glass bottles        Contains impuri-      No recycling compa-      No buyers
                             ties                  nies available
                                                   Buy beer and soft        Not enough supply for col-
                                                   drinks bottles only      lection/buying
                                                                            Limited storage space; fra-
                                                                            gile/dangerous to stock; dir-
                                                                            ty/messy to collect/store
Broken white glass                                 No recycling compa-      No buyers
                                                   nies available
                                                                            Limited storage space; fra-
                                                                            gile/dangerous to stock; dir-
                                                                            ty/messy to collect/store; not
                                                                            profitable
Broken colored glass                               No buyers, no recy-      No buyers
                                                   cling company availa-
                                                   ble
                                                                            Limited storage space; fra-
                                                                            gile/dangerous to stock; dir-
                                                                            ty/messy to collect/store; not
                                                                            profitable
PET plastics bottle                                Too many processes       Dirty/messy to collect/store
                                                   required
                             Poor quality, too                              Too many rejects/impurities;
                             many rejects                                   lack of familiarity/
                                                                            knowledge
                             Not segregated                                 Limited storage space; too
                             upon delivery                                  bulky
                                                   No buyers; not know-
                                                   ing where to sell; not
                                                   interested
PETE wasteplastic bags       Not segregated                                 Lack of familiarity/
                             upon delivery                                  knowledge; too many re-
                                                                            jects/impurities
                                                                            Limited storage space; too
                                                                            bulky; dirty/messy/odorous
                                                                            to collect/store; no buyers
                                                                            (not traded); not interested
Assorted plastics (sibak)    Not segregated                                 Limited storage space; too
                             upon delivery                                  bulky
                                                                            Too many rejects/impurities;
                                                                            lack of familiarity
                                                                            /knowledge; dirty/messy/
                                                                            odorous to collect/store
PP-PE plastic                Not segregated;
                             sometimes comes
                             with other types of
                             plastic
 90                        Stakeholders’ Relationships in the Recycling Systems



      Type of Waste             Recycling Plants     Trader-Consolidators              Junkshops
Computers (desktops,                                Cannot sell              No buyers; no direct traders
laptops, printers)                                                           Limited storage space; re-
                                                                             quire dismantling before
                                                                             collection/purchase; no
                                                                             weighing standard (for pric-
                                                                             ing)
Circuit boards (of com-                             No buyers; cannot sell   No buyers; no direct traders
puters, TVs, radios)                                                         Limited storage space; re-
                                                                             quire dismantling before
                                                                             collection/purchase; no
                                                                             weighing standard (for pric-
                                                                             ing); lack of familiari-
                                                                             ty/knowledge
VHS, VCD, DVD players                               Not interested; cannot   No buyers; no direct traders
                                                    sell
                                                                             Limited storage space; no
                                                                             weighing standard (for pric-
                                                                             ing); require dismantling be-
                                                                             fore collection/purchase
Electrical appliances                                                        Limited storage space; no
(fans, refrigerators, wash-                                                  weighing standard (for pric-
ing machines, gas                                                            ing); require dismantling
stoves/ovens, flat irons)                                                    before collection/purchase;
                                                                             no buyers; no direct traders
Electronic appliances                               No buyers                No buyers; no direct traders
(karaoke machines, stereo                           Consist only of hard     Require dismantling before
systems, radios)                                    plastic                  collection/purchase
                                                                             No weighing standard (for
                                                                             pricing); limited storage
                                                                             space
Air-conditioning units                                                       Limited storage space; no
                                                                             weighing standard (for pric-
                                                                             ing); require dismantling
                                                                             before collection/purchase;
                                                                             no buyers; no direct traders
Cell phones and accesso-                            No buyers, recycling     No buyers; no direct traders
ries                                                companies require
                                                    bulk volume)
                                                    Few suppliers
                                                                             Risk of theft; limited storage
                                                                             space; no weighing standard
                                                                             (for pricing); require dis-
                                                                             mantling before collec-
                                                                             tion/purchase
Automotive batteries                                                         Fire hazard; not saleable; no
                                                                             buyers
Batteries (dry cell, li-                            No buyers, cannot sell   No buyers
thium, cell phone batte-                                                     Limited storage space; too
ries)                                                                        bulky
                         Stakeholders’ Relationships in the Recycling Systems                       91



      Type of Waste            Recycling Plants    Trader-Consolidators             Junkshops
Styrofoam                    Supply unreliable                            Limited storage space; too
                             /insufficient                                bulky
                                                  No buyers, cannot sell, No buyers
                                                  no recycling compa-
                                                  nies available
                                                                          Fire hazard; not interested
Rubber                                                                    Limited storage space; too
                                                                          bulky; no buyers; fire
                                                                          hazard; not interested
Textiles/cloth                                                            Limited storage space; too
                                                                          bulky; no buyers; fire
                                                                          hazard; not interested
Wood/furniture                                                            Limited storage space; too
                                                                          bulky; no buyers; fire
                                                                          hazard; not interested
Oils, solvents, sludge                                                    Limited storage space; too
                                                                          bulky; no buyers; not inter-
                                                                          ested

 4.1.4 Analysis of Philippine Recycling Stakeholders

    The study results describe the actual operations among the key stakeholders in the buying
 –and selling of recyclables, considered as waste resources to be processed for reuse in the
 production of recycled products. The stakeholders in the trading chain are distinguished by
 the volume and extent of their trading transactions and the processing they conduct on the
 waste resources.
    In the trade of waste resources, up to the stages of processing and reuse in manufacturing,
 the problem of poor waste resource quality has been frequently encountered, often traceable
 to fraud, indicating unreliable behavior among stakeholders. This has resulted in loss of profit
 when materials are rejected in transactions between one stakeholder and the next in the trad-
 ing chain. The commercial viability of recycled materials is undermined by rejection from
 buyers, specifically, traders, manufacturers and importers.
    Major lessons from the obstacles to recycling in the Philippines are as follows:
 1. Quality standards should be developed by stakeholders for the different types of waste re-
     sources to be considered acceptable for recycling purposes, specifically for paper, tin cans,
     aluminum cans, glass bottles, and PET bottles.
 2. There is a need to implement the sorting and segregation of waste resources at strategic
     points in the recycling system, particularly at the point of waste generation, for the pur-
     pose of maintaining their cleanliness and quality, and facilitating the collection of recy-
     clables by type.
 3. Policy and planning for the development of the recycling industry should include meas-
     ures for financing, transportation, equipment, as well as measures to prevent fraud and
     trade in stolen materials.
 4. The identification of markets is essential to encourage the collection, processing, and
     business transactions of various types of recyclables as well as the manufacture of re-
     cycled products out of these materials.
92                   Stakeholders’ Relationships in the Recycling Systems



4.2 The Japanese Experience

Previous sections described the failure of linkages in the recycling system and measures to
foster reliable linkages between stakeholders in the Philippines. A similar situation exists in
other developing countries. Although the same kinds of problems once existed in Japan, some
efforts have been made to improve trading relationships.

4.2.1 Policies and Laws in Japan

   There are at least six laws in Japan that define the responsibilities of stakeholders in the re-
cycling system.
   The first was the Law for the Promotion of the Utilization of Recyclable Resources enacted
in 1991, thereafter modified in 2000 to the Law for the Promotion of the Effective Utilization
of Resources. Based on this law, the Japanese government specified the responsibilities of
manufactures or business entities in several categories, as presented in Table 3.
   Furthermore, a further five recycling-related laws have been enacted since the 1990s (Table
4). The Law for the Promotion of the Sorted Collection and Recycling of Containers and
Packaging requires business entities that manufacture and use containers and packages to bear
the financial responsibility of recycling. They are required to pay the necessary recycling fees
to a designated corporation, the “Japan Containers and Packaging Recycling Association.”
This association then selects a recycling plant through tender and makes payment to the recy-
cling plant. Local governments also play a role in the collection of waste containers and
packages.
   The Law for the Recycling of Specified Kinds of Home Appliances defines the responsibil-
ities of manufacturers in physically recovering resources. Recycling fees may be imposed on
consumers by manufacturers. Retailers who deliver new home appliances are obliged to take
back the replaced items. Targeted items include TVs, air conditioners, refrigerators and wash-
ing machines. Such items are relatively bulky and heavy, and are usually delivered by retailers
to customers.
   Under the Law for the Recycling of End-of-Life Vehicles, two manufacturers associations
collect the treatment fees for destroying coolants and disposing shredded dust and air bags.
Since automobiles are usually already dismantled in the market prior to recycling, the respon-
sibilities of the manufacturers are correspondingly smaller.
   The Construction Material Recycling Law and the Law for the Promotion of Recycling and
Related Activities for the Treatment of Cyclical Food Resources emphasize the responsibili-
ties of the waste generator rather than the producer. The Law for the Promotion of Recycling
and Activities for the Treatment of Cyclical Food Resources requires large-scale waste gen-
erators such as restaurants, food processing industries and other food service providers to make
efforts to reduce amounts of food waste and to recycle. Relatively large-scale waste genera-
tors should formulate action programs and report the results of their programs to the prefec-
tural government. The Construction Material Recycling Law also requires contractors to sort
out and recycle waste generated in the work of building demolition. Construction companies
are required to make proper arrangements with a contractor and report their activities to the
prefectural government.
                         Stakeholders’ Relationships in the Recycling Systems                         93


Table 3 Categories and Obligations under the Law for the Promotion of Effective
Utilization of Recyclable Resources
Category                              Obligations                       Industry/Products
Designated resource-         Business entities required to    Pulp and paper; inorganic chemical
  saving industries          reduce generation of             manufacturing; iron-making and
                             by-products                      steel-making/rolling; primary comer
                                                              smelting and refining; automobile
                                                              manufacturing
Designated resource-         Business entities encouraged     Paper manufacturing; glass container
  recycling industries       to use recyclable resources      manufacturing; rigid PVC pipes and
                             and parts                        pipe fitting manufacturing; copier
                                                              manufacturing
Specified reuse-             Required to ensure rational      Automobiles; home appliances; PCs;
  promoted products          use of raw materials, prolong    pachinko machines (a type of game
                             product life, and reduce gen-    machine); metal furniture; gas and
                             eration of other used products   oil appliances
Specified reuse pro-         Manufacturers required to        Automobiles; home appliances; PCs;
  moted products             promote use of recyclable        pachinko machines; copier; metal
                             resources and recovered          furniture; gas and oil appliances;
                             products                         bathroom units and kitchen systems;
                                                              devices using compact rechargeable
                                                              batteries
Specified labeled prod-      Manufacturers required to        Steel and aluminum cans; PET bot-
  ucts                       label products to facilitate     tles; compact rechargeable batteries;
                             sorted collection                PVC construction materials; pa-
                                                              per/plastic containers and packages
Specified re-                Manufacturers required to        PCs; compact rechargeable batteries
  source-recycled            promote self-collection and
  products                   recycling
Specified by-products        Business entities required to    Coal ash generated by the electricity
                             promote use of these             industry; soil and sand; slag of con-
                             by-products as recyclable        crete-asphalt and lumber generated
                             resources                        by construction industry

Source: Compiled from various sources.

Table 4 List of Japanese Laws on Recycling
Law for the Recycling of End-of Life Vehicles             Enacted: 2002
                                                          Enforced: 2005
Construction Material Recycling Law                       Enacted: 2000
                                                          Partially Enacted: 2000
                                                          Fully Enforced: 2003
Law for the Recycling of Specified Kinds of Home Ap- Enacted: 1998
  pliances                                                Enforced: 2001
Law for the Promotion of Recycling and Related Activities Enacted: 2000
  for the Treatment of Cyclical Food Resources            Enforced: 2001
                                                          Last Revision: 2007
Law for the Promotion of the Sorted Collection and Recy- Enacted: 1995
  cling of Containers and Packaging                       Partially enforced:1997
                                                          Fully enforced: 2000
Source: Compiled from various sources.
94                   Stakeholders’ Relationships in the Recycling Systems



   If the recyclables are collected and properly recycled in the market, there is less need to de-
fine the obligations of stakeholders. So why does Japan define these responsibilities by laws?
In the 1990s, Japan faced the problems of a lack of landfill sites and the illegal dumping of
shredded dust and construction waste. In order to reduce volumes of waste, the responsibili-
ties of stakeholders are defined by laws.

4.2.2 Classification and Criteria for Recycling Collection in Japan

   There are many kinds of recyclable waste. If one type of waste is mixed with other waste,
the recycler needs to sort out the waste from other materials. This increases recycling costs.
To utilize recyclable waste effectively, Japan has devised a classification system for recycla-
ble waste and criteria for receiving recyclable waste.
   The classification of recyclable waste depends to a large extent on recycling technology.
Naturally, paper, plastic and steel cannot be recycled in a single system. However, many
people may be unaware of the precise classifications of recyclables. To facilitate the smooth
transaction of recyclable waste, a standard classification was set up by the Japanese govern-
ment and collaborating recyclers associations.
   As an example, paper is classified into several categories. The recycling process differs
slightly according to the category of paper. Waste paper categories also differ in terms of val-
ue.
   It is debatable which is the oldest classification system for recyclable waste paper in Japan.
The Ministry of Commerce and Industry devised the “Classification of Waste Paper” in 1939,
which classified waste paper into 27 categories. The current classification system was set up
in 1971 by the Paper Recycling Promotion Center, consisting of nine categories and 29 sub-
categories. The nine categories are: “hard white shavings,” “cards,” “woody white shavings;
white manila,” “fine printed paper,” “woody printed paper,” “old newsprint,” “old maga-
zines,” “craft brown,” “old corrugated containers,” and “others.”
   The criteria for receiving recyclable wastes are equally important. If impurities are mixed
with recyclables and entered into the recycling process, the resulting recycled material may
not be saleable. A recycling factory also loses money if it buys nonrecyclable waste at the
same price as recyclable waste. If each user follows its own criteria, collectors face difficul-
ties in handling recyclable waste. At the same time, collectors can earn more money when
they mix non-valuable waste with valuable recyclable waste and sell it at the same price as
pure recyclable waste. This situation made it necessary to determine the criteria that set min-
imum standards concerning impurities and permissible levels of other paper waste.
   To establish these kinds of criteria, the Paper Recycling Promotion Center conducted a
survey in 1979 of paper mills and consolidators. The survey showed that 33.3% of paper mills
have written criteria for receiving used paper and 59.1% have criteria in non-written form.
The findings showed that instability in transactions resulted from unclear criteria, as well as
from different criteria being set by individual paper mills. Consequently, both paper mills and
consolidators recognized the importance of establishing common criteria. They agreed that
common criteria would ensure a stable supply of quality used paper to paper mills and would
serve to reduce complaints to paper mills from consolidators. The survey identified quality
problems regarding used paper, such as water content, the permissible level of mixture with
other types of paper, and the content of impurities. The results of the 1979 survey were scruti-
                     Stakeholders’ Relationships in the Recycling Systems                         95



nized by committees consisting of representatives from paper mills, consolidators, the Minis-
try of International Trade and Industry, the Clean Japan Center          a foundation specializing
in waste management and recycling           and the Paper Recycling Promotion Center.
   The criteria have been revised several times due to the introduction of new types of paper
and new treatment technologies. The revisions were also undertaken by a committee com-
prised of stakeholders. The latest list of impurities in used paper is shown below. The range of
the impurities and specifications continues to be extended.
   Similar classifications, standards, or guidelines have been developed for sorting other kinds
of recyclable waste, such as glass cullet bottles. In developing such criteria, it is noteworthy
that stakeholders have been accorded participation in the formulation process. In Japan’s ex-
perience, the survey was used as a starting point for stakeholders in reaching a common un-
derstanding of current conditions and problems (refer to Box 1, Box 2, and Table 5).
 Box 1   List of Impurities in Waste Paper in Criteria for 1979

 Carbon, resin processed paper, oiled paper, waxed paper, aluminum foil, plastic processed pa-
 per, non-woven fabric, cellophane, synthetic paper, expanded polystyrene, pitch, plastic bags,
 and others.                                    (Source: Paper Recycling Promotion Center)


 Box 2   List of Impurities in Waste Paper in Criteria for 2005

 List A: Materials unrelated to the raw materials for paper, which may cause significant prob-
 lems
 1) Stone, glass, metal, sand, and wood chips, etc.
 2) Plastic
 3) Resin-impregnated paper, parchment paper, textiles
 4) Tarpaulin paper, waxed paper, construction materials such as gypsum board
 5) Textile printing paper, thermal foam coated paper, synthetic paper, non-woven fabric
 6) Other materials which may cause damage to processes or products

 List B: Materials unsuitable to be mixed with raw materials for paper
 1) Carbon
 2) Carbonless Paper
 3) Vinyl or Polyethylene Coated or Laminated Paper
 4) Adhesive tape (but adhesive tape attached on the Carton box is excluded.
 5) Thermal Paper, Perfumed Paper
 6) Other materials not suitable for paper production
                                                 (Source: Paper Recycling Promotion Center)

Table 5 Criteria for Standard Quality of Waste Paper
                               Impurities
                                                                  Other Paper    Water content
                       List A              List B
Newspapers       Not acceptable     Less than 0.3%          Less than 1% *      Less than 12%
Cartons          Not acceptable     Less than 0.3%          Less than 3%        Less than 12%
Magazines        Not acceptable     Less than 0.5%          Less than 5%        Less than 12%
Miscellaneous    Not acceptable     Less than 0.5%                              Less than 12%
  paper
Office paper     Not acceptable       Less than 0.5%                            Less than 12%
Source: Compiled from Criteria for Standard Quality of Waste Paper, revised on November 29,
2006. * excluding inserted leaflets.
96                   Stakeholders’ Relationships in the Recycling Systems



4.2.3 Industrial Waste Information Exchange Program

   The Industrial Waste Information Exchange Program links suppliers with users in the in-
dustrial waste industry, in order to enhance the utilization of industrial waste. In Japan, local
governments have conducted such programs. The basic structure of a waste information ex-
change program is shown in Figure 2 below.
   A third party such as a local government, or a chamber of commerce or other public service
organization acts as a locus for collecting information regarding waste generated from indus-
tries and potential users of waste, through questionnaire surveys or Internet-based reporting.
The third party works as a middleman, who provides information about the supplier to the us-
er and vice versa. Following information dissemination, the suppliers and users negotiate
prices and conditions directly between themselves. The media used to disseminate the infor-
mation may include paper documents, magazines and Internet. Examples of successful cases
together with the types of waste concerned are shown in Table 6.
   This kind of program was initiated in Europe in the 1970s. In Japan, Oita Prefecture started
such a program in 1976. When the Oita prefectural government conducted a survey on indus-
trial waste generation and treatment in 1975 and 1976, they discovered a number of cases
where industrial waste that could have been recycled or used was instead disposed. The pre-
fectural government thus recognized the need for programs to bridge the gap between waste
generators and recyclers. Similar programs were also initiated by the governments of other
prefectures, including Ehime, Okayama, Osaka. The Clean Japan Center assisted in some of
these programs. In addition, it supported the interlinking of these programs, which encour-
aged the undertaking of transactions over a wider area. At least 20 similar programs had been
launched as of 1988. Some currently active programs may be found in Kanagawa, Kumamoto
and other prefectures.
   Several keys to sustaining such programs have been pointed out. It is preferable to have
industrial and commercial associations involved in the program than to have the government
organize everything. If a local governmental agency operates the program, it is likely to fail,
as private companies may not want to disclose their information to the government, and civil
servants may not understand the technical aspects involved. Before negotiations between a
potential supplier and user can take place, the third party should provide detailed information
based on the intentions of both sides. The third party should also investigate the companies
involved at the time of registration (Figure 2 and Table 6).

     Fig. 2 Basic Structure of Waste Information Exchange Program
                        Registration                            Registration

      Waste Gene-                           Third Party                          User
      rator

                       Information                            Information


                                            Negotiation
                     Stakeholders’ Relationships in the Recycling Systems                       97


Table 6     Examples of Successful Cases of Waste Information Exchange
       Waste             Supplier                 User                 Utilization
Ash                Power plant            Chemical industry      Neutralizer
Sewage sludge      Sewage plant           Cement industry        Raw material for ce-
                                                                 ment
Sludge             Paper mill              Manufacturer of fer- Fertilizer and feed
                                           tilizer and feed
Cooking oil        Catering       service, Recycling of waste Raw material for soap
                   hospital                oil
Waste oil          Transport industry      Recycling of waste Recycled oil
                                           oil
Waste oil          Transport industry      Public bath service   Fuel
Solvent            Electrical industry     Recycler              Recycled solvent
Tires              Dismantler of auto- Cement                    Raw material for ce-
                   mobiles                                       ment
Tires              Transport industry      Manufacturer          Recycled rubber
Paper waste        Steel industry          Paper industry        Raw material for pa-
                                                                 per
Wood chips         Lumber industry         Livestock breeder     Floor cover for live-
                                                                 stock sheds
Slag               Manufacturer            Construction industry Base course material
Dust               Manufacturer of lime Cement industry          Raw material for ce-
                                                                 ment
Source: Compiled from Clean Japan Center (1988a).

4.2.4 Eco-Town Projects

   Eco-town projects began in Japan in 1997. In eco-town projects, local governments col-
laborate with private companies in promoting recycling and waste minimization, making use of
the industrial infrastructure of the region. The project activities are supported by the Ministry
of the Environment and the Ministry of Economy, Trade and Industry, especially in the de-
velopment of advanced recycling facilities.
   Before starting an eco-town project in a certain region, the local government prepares an
eco-town proposal. This proposal is scrutinized by the two above-mentioned ministries, with
the view of using it to serve as a model for other regions. To date, a total of 26 eco-towns have
been approved. Eco-towns vary in type. For example, in Kitakyushu Eco-Town, recycling
factories have been built and operate in an eco-industrial park. Generally, the factories are
newly developed. Collaboration with research institutions located in the region is also stressed.
In Kawasaki Eco-Town, linkages between the steel, chemical and other relatively large indus-
tries have been enhanced, and new facilities have been constructed.
   If a recycling factory is not located in a region producing a certain type of waste, or if the
capacity of the recycling factories present is insufficient to efficiently utilize a certain type of
waste, one policy option is the establishment of an eco-industrial park.

4.2.5 Recycled products under Japanese Industrial Standards

   Japanese Industrial Standards (JIS) specify standards for industrial activities in Japan, in-
cluding standards for products and testing methods. The legal foundation for JIS is the Indus-
98                    Stakeholders’ Relationships in the Recycling Systems



trial Standardization Law. Japanese Industrial Standards cover dozens of recycled products
and testing methods, and are designed to promote the consumption of recycled products. Ta-
ble 7 shows examples of standards that have been formulated.
   The process of formulating standards is as follows. An industrial association or other or-
ganization submits a JIS draft to the Japanese Industrial Standards Committee. Following
consultation with experts and stakeholders, the Japanese Industrial Standards Committee es-
tablishes the standard and publicizes it.


Table 7     Recycled Products under Japanese Industrial Standards
                               Latest
     Code       Year Es-    Amendment
                tablished   or Confirma-
                                tion
A5011-1:2003   1997                        Slag aggregate for concrete – Part 1: Blast furnace slag aggregate
A5011-2:2003   1997                        Slag aggregate for concrete – Part 2 : Ferronickel slag aggregate
A5011-3:2003   1997                        Slag aggregate for concrete – Part 3 : Copper slag aggregate
A5011-4:2003                               Slag aggregate for concrete – Part 4: Electric arc furnace oxidiz-
                                            ing slag aggregate
A5015:1992     1979         2003           Iron and steel slag for road construction
A5021:2005                                 Recycled aggregate for concrete –(class H)
A5022:2007                                 Recycled concrete using recycled aggregate (class M)
A5023:2006                                 Recycled concrete using recycled aggregate (class L)
A5031:2006                                 Melt-solidified slag aggregate for concrete derived from munici-
                                           pal solid waste and sewage sludge
A5032:2006                                 Melt-solidified slag material for road construction derived from
                                           municipal solid waste and sewage sludge
A5731:2002                                 Recycled plastic inspection chambers and covers for rainwater
A5741:2006                                 Wood-plastic recycled composite
A5905:2003     1957         1994           Fiberboards
A5908:2003     1957         1994           Particleboards
A6201:1999     1958         2004           Fly ash for use in concrete
A6206:1997     1995         2002           Ground granulated blast-furnace slag for concrete
G3111:2005     1956         1987           Rerolled carbon steel
G3117:1987     1969         2004           Rerolled steel bars for concrete reinforcement
K6313:1999     1951         2003           Reclaimed rubber
K6316:1998                  2003           Vulcanized particulate rubber
K6329:1997     1954         2002           Retreaded tires
K6370:1999     1955         2003           Compounded stock for retreading and repair
K6450:1999                  2003           Rubber blocks and rubber pavements – test methods
K6930:1994                  2006           Reclaimed granular molding materials from agricultural poly-
                                           vinyl chloride film
K6931:1991     1979         2001           Reclaimed plastics bars, rods, plates and piles
K6932:2007     1981         2006           Recycled plastic stakes
K7390:2003                                 Testing methods for reclaimed polyethylene terephthalate (PET)
                                           moulding materials from PET bottles
K9797:2006                                 Unplasticized polyvinyl chloride (PVC-U) three layer pipes with
                                           recycled solid cores
K9798:2006                                 Unplasticized polyvinyl chloride (PVC-U) three layer pipes with
                                           recycled foamed cores
L3204:2000     1985         2005           Recovered fiber felt
R5214:2003     2002                        Ecocement
P4501-1993     1962         1998           Toilet tissue papers
Z1506:2003     1951         1997           Corrugated shipping containers
Source: Compiled from Japanese Standards Association (2007).
                     Stakeholders’ Relationships in the Recycling Systems                     99


   To speed up the establishment of a Sound Material-Cycle Society, the Japanese Industrial
Standards Committee developed an Action Program for Promoting Formulation of Environ-
mental JIS in 2001, which also covers standards relating to recycling. Some of the items
specified in the Action Program have been requested by local governments which wish to
promote the use of recycled products. One former obstacle to the use of recycled products was
the fact that no clear standards existed to ensure the quality of recycled products. After JIS
for recycled products established, government can easily schedule the recycled products in
their procurement.
   According to an expert, certain JIS for recycled products lack specified environmental
safety testing methods. Hence there is still room for improvement in Japanese standards.
Nevertheless in general, the creation of standards for recycled goods has significantly im-
proved their reliability.

4.2.6 Eco-Labeling and Green Procurement

   In order to promote environmentally friendly products, ecolabeling has been introduced in
several countries. Ecolabeling covers efforts to tackle diverse environmental issues, including
efforts in recycling. According to ISO classification, there are three types of ecolabeling. Type
I, which is defined in ISO14024, is certified by a third party, based on measurement against a
standard. Type II, defined in ISO 14021, is a declaration of environmentally sound features by
the manufacturer itself. Finally, Type III, defined in ISO 14025, is ecolabeling indicating in-
formation disclosure.
   In Japan, Eco Mark, a Type I ecolabel, was introduced in 1989. It covers 47 categories and
about 4,600 branded products. Products are examined in terms of various aspects, including
recycling and energy conservation. Some product categories are directly related to the 3Rs,
such as “No. 22: Products made from used tires”; “No. 31: Refillable containers”; and
“No.129: Recycled soap made from cooking oil.” Criteria for paper also include requirement
regarding the use of waste paper.
   EcoLeaf is an example of a Type III ecolabel, which was introduced in 2002 by the Japan
Environmental Management Association for Industry, with support from the Ministry of
Economy, Trade and Industry. EcoLeaf environmental declarations apply the life cycle as-
sessment (LCA) method to quantitatively present environmental product information. Based
on extensive data analysis, environmental impacts such as global warming and acidification
are shown in the label.
   Ecolabeling alone may not significantly impact the level of consumption of environmen-
tally friendly products. Moreover, if production volumes are low, products may become ex-
pensive as producers cannot enjoy the benefits of mass production. Since the public sector
itself is a large consumer of products, implementing an environmentally friendly public pro-
curement policy can serve to promote the production of environmentally friendly products.
   Japan enacted the Green Purchasing Law in 2000. This law obligates the central and local
governments and affiliated organizations to take the lead in purchasing eco-friendly products.
100                  Stakeholders’ Relationships in the Recycling Systems



4.3 Current Measures to Overcome Breakdowns in Linkages: Implications for the
Philippine Recycling System

As shown in section 2, the Japanese central and local governments as well as industrial asso-
ciations have conducted numerous efforts to establish proper relationships between waste
generators, collectors and recyclers. Although such kinds of collective action by stakeholders
are still relatively weak in the Philippines, several efforts have been initiated in the Philip-
pines to overcome breakdowns in linkages between stakeholders. These are presented below.

4.3.1 Quality Standards for Recyclable Waste

   In the 2006-8 JICA project in the Philippines, the “Study on the Development of the Recy-
cling Industry,” quality standards for recyclable waste, including paper, tin cans, aluminum
cans, glass bottles, PET bottles, plastic containers and packages, and white food trays and
packages, have been formulated by recyclers of these materials. Dissemination of the related
guidelines and actual implementation of the standards may help improve transactions between
stakeholders. However, in the process of developing the guidelines, the involvement of con-
solidators and collectors has been limited in the Philippine case. If stakeholders themselves
were involved in the process of developing guidelines and quality standards, the process itself
would become an opportunity to disseminate information to Philippine stakeholders.
   As far as is currently known, there has been no collective action by Philippine recyclers to
set standards for recyclable waste. One incentive for recyclers to disseminate standards for
recyclables to waste collectors and generators would be an improvement in the quality of
segregated waste, which would in turn reduce recycling costs.

4.3.2 Industrial Waste Exchange Program

   The Philippine Business for the Environment (PBE) organizes the Industrial Waste Ex-
change Network, which helps to link generators and users of industrial waste. This govern-
ment program began in 1988, initiated by the Environmental Management Bureau (EMB) of
the Department of the Environment and Natural Resources (DENR). However, companies
have been reluctant to disclose detailed information about their waste to the EMB since this
same government agency also handles pollution control. Since the EMB met limited success
in tying up industrial waste generators and users, management of the Industrial Waste Ex-
change Network was transferred to the PBE in 1998.
   Under current practice, industrial waste generators and users register in a database for
matching companies that generate waste with those that recycle waste. More than 400 compa-
nies have participated to date, and it is said that 1,100 or more renewable materials and types
of waste have been registered.
   The PBE’s activities are chiefly concentrated in Metro Manila, the National Capital Region
of the Philippines. In other areas, partners have been selected in some cases, such as in Cebu.
However, activity outside Metro Manila is limited, as most industrial users of recyclable
waste are located in the capital region and the neighboring area.
                     Stakeholders’ Relationships in the Recycling Systems                   101



4.3.3 Pilot Collection Conducted by Industries

   A pilot collection program for mobile phones has been conducted as part of the “Study on
the Development of the Recycling Industry,” a joint project between the Philippines’ Board of
Investments and the Japan International Cooperation Agency (a BOI-JICA project). Mobile
phone manufacturers have been reluctant to join the program, but participating service pro-
viders and retailers expressed eagerness to continue the collection program even after
BOI-JICA project finished. Bins for collecting mobile phones have been placed in some malls
and government buildings. The collected items are taken away by an e-waste recycler in the
Philippines.
   A pilot collection program for plastic bags has also been conducted in this BOI-JICA
project. It has been conducted by a plastic manufacturers’ association and has received pos-
itive responses from some communities and schools. The manufacturers also said they would
be willing to continue the project.
   Both of these pilot collections presently cover only the Metro Manila region. However, ex-
pansion to other regions is expected in the future.

4.3.4 Ecolabeling and Green Procurement

   Article 26 of RA 9003 states that the Department of Trade and Industry (DTI) shall make
proposals to stimulate the demand for the production of products containing post-consumer
and recovered materials. Moreover, Article 27, entitled “Requirements for ecolabeling” re-
quires the Department of Trade and Industry (DTI) to formulate and implement a coding sys-
tem for packaging materials and products to facilitate waste recycling and reuse.
   The memorandum of understanding (MoU) on the establishment of ecolabeling was signed
by the Product Standards Office of the DTI, the Environmental Management Bureau of the
DENR, and a nongovernmental organization, the Clean & Green Foundation, in March 2001.
The ecolabel certifies third parties in accordance with ISO14024. Although guidelines for
every product are stipulated, to date only detergent and cement products have been certified.
   Regarding green procurement, in 2004, the Philippine president issued Executive Order No.
301, which mandates each government organization to undertake a green procurement pro-
gram. Specifically, it requires the using of environmental criteria as bidding conditions, the
defining of standards and conditions for environmentally friendly products, the development
of programs to provide incentives for the supply and consumption of environmentally friendly
products, and other measures. Moreover, the details of the green procurement programs car-
ried out by each organization should be reported to the National Ecolabelling Program Board
(ELPB).
   Before this order was issued, the BOI established the BOI Green Procurement Plan in 2003,
and established guidelines for paper (bond paper, tissues, toilet paper, folders, envelopes) and
office automation equipment (computers, copiers, fax machines, etc.). The guidelines en-
courage persons-in-charge to purchase ecolabeled products and domestic products.
102                  Stakeholders’ Relationships in the Recycling Systems



4.4 Recommendations for the Philippines

Although there are several efforts to improve the linkages among stakeholders in the Philip-
pines, they are still weak. The failure of stakeholders to satisfy supply and demand require-
ments at each transaction point in the Philippine recycling system can undermine the envi-
ronmental sustainability expected from the recycling efforts. Central and local governments,
the private sector, and civil society alike advocate the need for cooperation in order to achieve
recycling goals. Given the data from the Philippine and Japanese experiences, the following
recommendations can be made to improve cooperation between stakeholders.
1. Communication and information must reach all stakeholders regarding the desired quality
    and quantity of recyclables, specifically relating to the supply and demand requirements of
    recycling plants and manufacturers.
2. The sorting and segregation of clean recyclables are vital for enabling recycling
    processors and manufacturers to produce recycled materials. These activities must be
    undertaken at the waste generation and collection stages. Public information and logistics
    must be provided to adequately prepare waste generators to engage in the sorting and
    segregation of quality recyclables.
3. Quality standards for recyclables and recycled materials need to be developed among
    stakeholders through values formation and capacity building, and compliance must be
    monitored and evaluated for further action.
4. To achieve the accumulation of large volumes of recyclables, there needs to be logistical
    support for all stakeholders, including financing, transportation, processing technology,
    market research and planning.
5. The theft of potentially saleable recyclables causes trouble to all stakeholders, not to
    mention to the country’s law and order authorities. This must be addressed by policy to
    ensure the flow of quality recyclables to junkshops, recycling plants and exporters.
6. For strategic planning, market planning development, and other forms of intervention, it is
    vital to engage the participation of stakeholders the recycling plants and recycling
    industry associations, the trader-consolidators, and the junkshops. The relevant central and
    local governmental agencies should also serve as principal participants in planning and
    implementing effective recycling strategies. With their recent initiative, the BOI and the
    DTI could be designated as lead organizations, with support from JICA.

Conclusions

The findings of the IDE study describe the stakeholders and their patterns of interaction and
operations, as well as issues and concerns relating to the Philippine recycling system. The ex-
periences of Japan are also instructive for the Philippine efforts in planning the development
of its own recycling industry.
   In the Philippine setting, the critical problem in stakeholders’ relationships in the buying
–and selling of recyclables, as well as in the processing of these recyclables by recycling
plants and manufacturers, comes down to the poor quality of waste materials, referred to as
recyclables. The volume and quality of recyclables are constrained by weak compliance with
sorting and segregation at the waste generation level, which also leads to dirty and unsuitable
recyclables for processing and manufacturing recycled products. When sellers dishonestly in-
                     Stakeholders’ Relationships in the Recycling Systems                     103



clude poor quality waste materials and impurities, buyers incur loss from having to reject and
discard unsuitable materials; or, if such materials are used, this results in higher costs of pre-
treatment for reuse in manufacturing, or poor quality manufactured recycled products.
   Unreliable stakeholder behavior, where poor quality materials are passed on in the recy-
cling process, undermines the potential for expanding markets for recyclables and recycled
products. The trading interface of the waste generators, primary collectors, and consolidators
is constrained by the pricing of and demand for recyclables from the recycling plants and
manufacturers. Instability in price and demand undermines the profitability and stockpiling of
recyclables, resulting in unsteady supply. In the long run, the recycling plants and manufac-
turers cannot simply rely on the collectors for the volume they need, given their technological
capacity and market demand. These factors undermine the recycling system and may defeat
the goal of environmental sustainability by curtailing the extraction and use of virgin mate-
rials in the continued cycles of production and consumption.
   The experiences of Japan in recycling and the recent initiatives of the Philippines prove to
be mutually instructive for planning the development of the recycling industry, specifically in
standards setting, ecolabeling, and green procurement. They may also be helpful for other de-
veloping economies.
   The length of operation of Japanese policies and project interventions indicate their sus-
tainability. As shown in Section 3, similar activities have been introduced in the Philippines. It
is important for the Philippine government and organizations to learn not only the policy tools
used in Japan, but also the process of formulating policies and coordinating relations among
stakeholders. To address the problem of theft, possible measures would include a registration
system for collectors and junkshops, and intervention in management systems.
   Drawing from the recycling problems and recent initiatives in the Philippines, as well as
from Japan’s positive experiences in resolving similar problems, it can be seen that various
measures exist to sustain recycling as a solution to environmental problems relating to waste
materials. Fundamentally, there is a need to develop a culture of waste sorting and segregation
among society as a whole. Improvements in the systems of collection, procurement, and waste
exchange can help increase the volume of recyclables. The setting of quality standards and
information dissemination can help improve the quality of the collected waste materials, as
well as decrease the costs of pretreatment at the recycling plant. Meanwhile, the creation and
expansion of markets with steady buyers encourage the collection and trading of recyclables.
Developing the recycling industry in the Philippines and sustaining existing initiatives in Ja-
pan are both in line with global commitments to protecting the environment from degradation
from pollution due to improper handling of waste, specifically solid waste from different
sources of generation.


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